Is oil & gas a dying industry?
I'm looking at the big oil majors who have their own trading analyst programmes. Is the industry dying? It is very niche so I don't want to pigeonhole myself.
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No. Petroleum products are used to create almost everything we use.
Challenged is a better word bc the world needs hydrocarbons still. Shale is pretty much a bust from a business perspective because the production profile falls off a cliff so fast that to keep up you need to continue drilling. Drilling is expensive thus you need more debt and then you become overlevered just by virtue of your core business - then even the slightest downturn will ruin you and you’ll end up filing. Its a miracle that there hasn’t been more carnage in energy. A lot of the names that are killing it the last few weeks probably need 55-60 oil to generate FCF. And they’re up like 200%.... makes no sense
You will get pidgeonholed quickly in oil and gas. It is a very niche industry but also a huge industry. Most of what you’ll learn on the trading desk or as a FPA guy at a major will not translate to any other industry besides oil and gas.
The industry isn't going to die because but def wouldn't recommend to start your career in it. As mentioned above it's a niche industry that is complex, doesn't offer many general exit opps outside of the industry and is a tough sell in comparison to a trader in a BB S&T or other coverage group bankers.
Tough sell in comparison to BB analyst: depends on who you're selling to, but in general I'd say someone coming out of a major's grad scheme would have a more diverse skillset. Depending how you spin/emphasize your 3-5 rotations (ops, research, risk, etc), you can also demonstrate an interest across multiple industries/job functions. It doesn't hurt that O&G remains a highly international business with physical assets/operations.
So disagree with all the comments on 'pigeonholing'--it's not like you're going to be a petchem engineer. The nature of grad programs in any industry is that they're letting you see a lot of different things but not in any sort of indepth way that will make you unmarketable if you ever decide to leave. Yes, perhaps you won't have as easy a time going into Corpfin/dev, and certain doors like PE might get closed, but if you have any future inclination to stay in trading I'd think twice before turning down Shell/BP (note that you'll have opportunities not just in energy, but also in metals if you move to an independent. And you'll also always have a path into BB S&T.).
If you're interested in staying in energy trading for the long term or enjoy living in Texas then it's fine but it does pigeonhole you. I know interns not in energy rx are most definitely not comfortable heading into O&G IB because they know it's going to be impossible to go to a non energy PE firm, also I don't think any O&G bankers on this forum are going to recommend O&G over TMT or M&A for the foreseeable future and I doubt many O&G traders are going to choose an energy trading program over a BB S&T unless they truly enjoy energy or like the program structure.
The trading programs are fine and if OP enjoys O&G which is still an interesting field then it's an easy decision but if OP is trying to hedge risks it's a terrible strategy.
Your timing is good: there's a new company being formed in the energy trading space. The founder is a real standup guy with a great track record in the field- you should give him a call: https://www.reuters.com/article/us-enron-skilling-new-venture-exclusive…</a">link
He’s still got some genius in him, that’s for sure.
God - that just reads like another american greed episode in about 5 or 10 years. Although, then again, I read an article about folks who are suing their brokerage firms for 'allowing' them to put their entire life savings into double levered mortgage REIT ETN's. So... who knows anymore.
it's a commodity
Nope.
The world will almost always need hydrocarbons, a exponentially growing Africa and Asia (both in terms of population and economic growth) will need relatively cheap fuel, gas is pretty green all things considered and has massive geopolitical power (Nord Stream 2 lol).
What happened to Nord Stream 2 is pretty ridiculous in my view, but I am biased since I hold Gazprom stocks.
Curious to hear people's thoughts on joining / being in Energy or Natural Resources groups outside of Houston for those of us who are undergrads, junior bankers, or MBA students considering junior-level roles. I know most BBs / EBs have teams in NYC. Presumably NYC gets more of the non-O&G dealflow in the sector. Anecdotally I've heard a ton of dealflow is going through these offices in the last year related to the energy transition and demand from SPACs for EV/renewable assets.
I think BofA might be the only BB that has a O&G team sitting out of NY. At least with the one group I am super familiar with, the energy transition and ESG related mandates are flowing through Houston and that particular group has been getting a lot deal flow in that area as of late actually.
Would be curious which group it is.
I was under the impression GS JPM, MS, Barc, CS, Citi all had either "Energy" Natural Resources" or "Oil & Gas" NYC groups, albeit smaller than the Houston ones.
No, look at global demographics, it's nothing but positive for oil and gas. The downside is government's intervention trying to control more and more of the energy industry, and energy is part of everything (food, clothing, transportation, etc).
Oil is the next hyper-growth industry bubs
Coal is the future. Big black beautiful Coal!
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